Evaluating a decision: what the outcome alone cannot establish
In a bank, a fashion business or a trading company, the outcome easily becomes the verdict on the decision. The management question is more precise: how can we assess the quality of a choice without allowing its outcome to rewrite the reasons that justified it?
What the literature establishes
Jonathan Baron and John C. Hershey (1988, Journal of Personality and Social Psychology) demonstrated experimentally that knowing a decision's outcome influences assessments of its quality, even when the information available at the time of the choice is identical. A favourable outcome therefore leads to a more positive assessment of a decision than an unfavourable one. This outcome bias undermines management evaluations that treat success as sufficient evidence of sound judgement.
The mechanism that reconstructs the past
Baruch Fischhoff (1975, Journal of Experimental Psychology: Human Perception and Performance) showed that knowing an outcome retrospectively changes the probability people assign to it. Participants do not fully recognise the influence of this knowledge on their judgement. This hindsight bias complicates learning from experience: what was initially uncertain appears more predictable once it has happened.
The premature conclusion
One might conclude that decisions should be evaluated without considering their consequences. That would confuse two questions: the soundness of the initial reasoning and what can be learnt from the results. The outcome remains essential, but it should be compared with expectations recorded before the decision, rather than with an explanation reconstructed afterwards. (our executive and employee training programmes)
What these findings do not allow us to promise
These experiments establish effects in controlled tasks; they do not directly measure their magnitude in Lugano businesses. Nor do they demonstrate that a decision journal, on its own, improves financial performance. Recording the reasons for a choice provides a verifiable record, not a guarantee against mistakes or self-serving justifications.
A practical check in Lugano
Within SHR's decision-making programme, one possible exercise is to document a category of recurring choices before commitment: bank lending, fashion assortments, trading purchases or investments in an Italian-speaking family SME. A dated record, written in Italian if that is the working language, sets out the options, available information, expected outcome and review date. At the review, the manager first assesses the reasoning from this record, if possible without yet knowing the result, then compares that assessment with the observed outcome. The measure is the proportion of reviewed decisions with a record predating commitment and expectations explicitly compared with the result; it checks review discipline, not a performance gain. To go further: explore the Decision-making training in Lugano, or browse our executive and employee training programmes in Switzerland.
In pictures: Decision-making in Lugano
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